Under the latest withdrawal rules, 100 percent lump-sum withdrawal is allowed at retirement (age 60 or later) if the total NPS corpus does not exceed Rs 8 lakh. This limit was recently increased from Rs 5 lakh, giving small-corpus subscribers greater flexibility.
If the accumulated pension wealth is between Rs 8 lakh and Rs 12 lakh, subscribers can withdraw up to Rs 6 lakh as a lump sum, while the remaining balance must be withdrawn gradually through options such as Systematic Unit Redemption (SUR) or used to purchase an annuity.
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For corpus amounts above Rs 12 lakh, subscribers can withdraw up to 80 percent as a lump sum, while the remaining 20 percent must be invested in an annuity plan to ensure a regular pension income after retirement.
These updated rules were introduced by the Pension Fund Regulatory and Development Authority (PFRDA) as part of broader reforms to make the retirement savings scheme more flexible and investor-friendly. The changes also allow subscribers to remain invested in the NPS until the age of 85, extending the earlier limit.
In addition to retirement withdrawals, partial withdrawals of up to 25 percent of a subscriber’s own contributions are permitted during the account’s tenure for specific needs, subject to certain conditions.
Overall, the revised withdrawal framework aims to balance liquidity for retirees with the need to maintain a steady pension income, ensuring that NPS continues to function as a long-term retirement savings instrument.
